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Thursday, January 05, 2012

For how long can Merkel have it both ways?

As the escalating crisis in the eurozone has consistently frustrated politicians’ attempts to come up with adequate solutions, Germany, the block’s de-facto economic hegemon, has come under increased pressure to take charge of the situation both politically and economically in order to restore confidence in the single currency. Unsurprisingly, this has roused well established fears around Europe concerning German domination.

Are such fears well grounded?

Throughout the crisis, Germany has had to balance two of its percieved vital post WWII national interests: It's commitment to Europe on one hand, and its diehard comitment to 'price stability and hard money (the latter is percieved to be threatened by more bailouts, eurobonds, and massive ECB intervention which risk trigger high inflation at some point) on the other. It is not unfair to say that the government has been dragged kicking and screaming into the increasingly desperate bail-out efforts with Merkel pushing hard for stricter spending controls as a quid pro quo for the bailouts.

This has resulted in a 'worst of both worlds' scenario for Merkel; on one hand the domestic opposition, other EU member states and global players have accused her of insufficient commitment to the euro/European project (the two are often fallaciously used interchangeably). One notable example was Polish Foreign Minister Radoslaw Sikorski's speech in Berlin in which he said: "I fear German power less than I am beginning to fear German inactivity.” On the other hand however, the current crisis management measures backed by Merkel have already provoked significant anti-German sentiments, not least in Greece, where references are already being made to German past attempts to dominate Europe. To be fair, it didn't exactly help that Merkel ally Volker Kauder found it appropriate to claim that "Suddenly Europe is speaking German".

Although Germany is going through a very dynamic internal debate at the moment, it's wrong to say that most Germans actually like what they see in front of them. In an interview with the German Bundestag’s weekly paper, Das Parliament, former German President and former Chairman of Germany’s Constitutional Court, Roman Herzog (a member of Merkel's CDU party), warned that the eurozone crisis could be a threat to democracy in the EU, and warned that the Bundestag had not been afforded sufficient opportunities to discuss the debt crisis.

Concerns about the corrosive effect on the democracy resulting from the eurozone are becoming widespread, and there is significant internal opposition to Germany taking on the role of the "irreplaceable yet reluctant hegemon", as Michael Stürmer, the editor of Die Welt, put it in an editorial a couple of weeks back.

Given the widespread prognosis that the eurozone's troubles are likely to deepen in 2012, this will further strain Merkel's attempts to have it both ways, i.e. more fiscal integration with credible sanctions but without Germany playing a leading role (with more German money on the table). Add to this the threat of France losing its Triple A rating - which would make that country look even more like the junior partner in the Franco-German relationship - and Berlin may have little choice but to shoulder even more of a leadership role in Europe.

But if Europeans are unhappy about such a development, the Germans themselves are probably just as unhappy. In fact, more reluctant leaders have rarely been seen...

Roman Herzog seems to be blinkered there is no democracy in the eu it is after all a small group of politicians and unelected political failures, the people don't get any say in what happens whatsoever.